Great criticism C9...have you made any picks lately? What should we be putting our money into?
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Great criticism C9...have you made any picks lately? What should we be putting our money into?
THE AUSTRALIAN
Page 37 10/11/04
Discount price war warning
Katherine Jimenez
November 10, 2004
FIERCE competition in the $4 billion discount variety market is unlikely to ease next year, with Warehouse Group chief executive Ian Morrice warning yesterday that the retailer would remain aggressive on pricing as it sought to build its brand across Australia.
Unveiling another disappointing sales result, Mr Morrice, who heads the New Zealand parent company The Warehouse Group, said that a competitive market was the "kind of trading environment the Warehouse is best at".
The fundamentals of the retailer's promotional program "always remain the same", he said, dismissing criticism from some of its rivals about the aggressive nature of its price promotions.
Warehouse in Australia fights in the same bargain retail space as Miller's Retail, The Reject Shop, Coles Myer's Kmart chain and Woolworths' Big W stores. Miller's shares fell 4c to $1.24 yesterday, with Reject Shop down 9c to $2.69.
Mr Morrice said Warehouse stores were "set up to be a store where everyone gets a bargain and you can't be a store where everyone gets a bargain if you don't have very strong pricing and aggressive promotions".
In the past few months, he said, its promotional activity remained aggressive but was more focused on categories where Warehouse wanted to be recognised. Those include toys, entertainment, electronics and consumables -- which includes items stretching from lollies to shampoo.
His comments came as the parent company revealed a 2.4 per cent slide in comparable sales in Australia for the 13 weeks to October 31, compared with the previous corresponding quarter.
Top-line sales were flat at $115 million, despite an increase in retail selling space and a major overhaul of the business last year.
The poor sales numbers follow a string of bad financial results over the past four years. Warehouse reported a loss of $32.2 million in the 2003-04 financial year.
The weaker sales result from Australia was not the only black spot in the New Zealand group's overall unaudited sales result. The NZ business known as Red Shed reported a 2.6 per cent drop in comparable sales growth.
Current WHS price is starting to reflect "Where Everyone Gets a Bargain" :)
Not yet but getting there. I think somewhere around $3.30 is fair value assuming Australia is an (on)going concern. 'Course if sentiment turns nasty as opposed to just realistic then the price could go sub $3. I might be crying myself at that point 'cos I'd have probably bought!
THE KING says Dont forget they are CUM DIV 4 cents till Friday, thats NICE... [^][^][^]
Most recentlyQuote:
quote:Originally posted by CAM
Great criticism C9...have you made any picks lately? What should we be putting our money into?
NZX: MHI (from$5), EBO (from low $3,breakout $3.50), RPL (all the way..fm 29-30c)
ASX: NTG (risky but fm 4c-5c) , HWG (fm 11-12c), HWE (most recent fm 67-68c)
money into the ASX stocks with NZD high.
thanks CAM, how about yourself?
I jumped ship recently after being one of these people who had stubbornly held since about $7 in the belief that Aussie would turn around. However I get the feeling now that Oz isn't the only problem and once people like me start jumping then all those Mum and Dads who put their hard earned into this will also decide that enough is enough and take what they can get. Who will buy at the moment though?
I believe that the warehouse was a great company and filled a niche here in NZ but at the moment it is lost, here is hoping that in the future they can turn it back around.
My uneducated pick is for the SP to fall to just above $3, in fact I will go $3.11 by Christmas.
C9 I am probably a dork as well but these are the thoughts on the surface of my mind at the moment. Moved into NOG from here.
Cheers,
MPC
Bongo,
I stuck my neck out on RBD - said it was a dog, admitted I'd f*cked up, and sold my holding.... It still hasn't gone above the price I sold at.
I stuck my neck out on OTI on the ASX - said it wouldn't go where everyone else thought it would, and it didn't.
I stuck my neck out on FAN on the ASX (up over 100% from my initial purchase a year ago).
I stuck my neck out on OCL on the ASX - selling after it had jumped 40% - it then kept climbing, but has since come back somewhat.
I stuck my neck out on ARP on the ASX - and emerged with a face covered in egg [B)] - I sold just before they announced a special dividend and the price shot up by 20%. I did still make a 10% profit though... And I never said the company would not produce consistent returns.
I have stuck my neck out on UOS on the ASX. We will see what happens there.
So anyway, I think my stock-picking record basically kicks yours in the proverbial.
You claim to follow Buffett, yet obviously have not understood the concept of a margin of safety - or the idea that turnarounds seldom turn - or the idea that if you find out you are wrong, you should accept the mistake, sell, and move on to greener pastures.
Buying WHS at upwards of 20x earnings, with small possibility of large profit growth in the next couple of years was simply suicidal!
Much better to buy a company like FAN at 22x earnings (last year) with 50% profit growth the year before, and the likelihood of a further 50% rise the next year (which eventuated).
The reaction to the quarterly sales report was not overdone, because WHS is so fundamentally over-priced. You should not be paying 20x earnings for a company whose profit is dropping!
At 20x earnings, assuming no growth, a company will take 20 years to earn your investment back. That's a 5% annual return. After inflation, thats a 2.5% return! Why not buy government bonds??????????
If WHS did in fact generate 20% growth in profit, year after year, then it would justify a PE of 20.
This simply isn't going to happen. It is too big in NZ, and not competing well enough in Aussie.
The best you can expect from NZ, and I mean maximum upside, is likely to be 10% (annualised) profit growth per year - don't get confused - if WHS profits are down 20% this year, then they will need to increase profit by 60% next year to gain annualised growth of 10% (I think... My math isn't that fantastic, but you get the gist).
So Bongo, you overpaid for a company that is underperforming. Buffett advises people to pay a fair price (or preferably underpay) for superior companies, that continue to produce excellent results.
As soon as you saw WHS heading south (the company, not the share price, the two are distinct) you should have bailed. Same with RBD - although at least with RBD you had more of a margin of safety with it only trading at low PE multiples. That limited your losses.
You should only ever pay 20x earnings for a company that is truly outstanding with large growth potential. Not one that is limited to 10% max upside in its strongest market, and is struggling to compete through an over-ambitious expansion into a new market.
I guess I'm sticking my neck out on this one huh Bongo???
Also,
While I usually don't get along so well with C9 - he did do pretty well for himself on ATR on the ASX... 1000%+ in little over a year... Seems pretty darn good to me...
Personally I only managed about 300% or so... the benefits of getting in early huh? Those are the returns you get when you buy solid companies with large potential for growth trading at significant discounts to the value of their future income streams (their intrinsic value). Still much better value than WHS too - about 8x conservative projections of forward earnings, with growth looking likely into the future....
Its not too late to actually make some money on shares Bongo...
By the way, If you would like, I actually have a personal fund that I manage for some people, Email me if you would like to make a deposit. :)
Well done on SKC - you
It was on the news making a comment that WHS didn't get the killer product last Xmas, the XBox, hence didn't do well and they are hoping for a better Xmas season this time. I think it is unlikely because WHS does not have the killer product this Xmas either. It is no longer XBox. It is iPod this year! [8D][8D] Something much smaller but with a bigger price tag.
Actually TLA87...
you are right about the WB thing
At the time I was warning Bongo AND co of IRRATIONAL EXUBERANCE...the WHS was trading on a PE of 30x at its peak.
At one stage it was priced higher than the great WAL!!!!!
which was trading at 29x during the same period.
I was also told by them (incl Gerry) that Cullen would be putting LOTS of $$$$ into WHS, the price would rocket over $8, the stock would split again.....dominate Aussie....then Head of to China, or North America. anyway.
I wouldnt be rubbing it in now if they hadnt been so single minded and rude.
I stuck my neck out and opposed them, and I was definetly in the minority;)
From here, now over 1/2 of its Market cap destroyed...I think $3 will not be broken, let alone $2...however
There is no rush, thats for sure.
They say digital cameras is the big thing this XmasQuote:
quote:Originally posted by The BOWMAN
It was on the news making a comment that WHS didn't get the killer product last Xmas, the XBox, hence didn't do well and they are hoping for a better Xmas season this time. I think it is unlikely because WHS does not have the killer product this Xmas either. It is no longer XBox. It is iPod this year! [8D][8D] Something much smaller but with a bigger price tag.
2000 per store is one big pile of digital cameras
Want one ... bargain price
Probably the best thing to do with your WHS shares is sell them now to fund your Xmas cravings!
No matter how you look at this, WHS currently belongs in the sub $3 bracket, life is not going to get any easier for them in the next year and beyond.
Whether it declines to this price is another matter, the market is a weird place at times :) But the downtrend will continue I believe
Plenty of money being spent by the 'poorer' aussies - from Coles sales release
Its discount chains were especially vibrant, with Target's sales from stores at least a year old rising 10 percent to A$702 million, and Kmart up 9 percent to A$905 million.
And WHS Australia hardly moved
Yep, it's on the decline alright. I thought they might turn it around but seems a longer haul than expected. When the dust settles it'll be worth buying I'm sure. Probably going to be a great traders stock till then.
Key king/jester/fool/whatever - what price will your secret cabal settle on now and support ;)
Warehouse gets go ahead for mega Palmerston North store
11.11.2004 1.40 pm
Work on the Warehouse's controversial mega store in Palmerston North is due to start this month after the company received the final go-ahead yesterday.
Independent commissioner Paul Cavanagh yesterday issued a resource consent after two years of challenges from the Railway Land Action Group and -- for part of the time -- Progressive Enterprises, which owns Countdown and Woolworths.
Part of the objections centred on the fact that the land was not offered to anyone but the Warehouse and that there was little, if any, consultation.
The consent Mr Cavanagh issued is non-notifiable, meaning there will be no more consultation or appeals.
Former mayor Mark Bell-Booth and the previous council agreed to the sale of the land in September 2002, but the deal was in limbo until the appeals process was exhausted.
Peter Eathorne, general manager of City Contact, which deals with building permits for the city council, said the commissioner's decision drew a line under a painfully long process.
"It has been quite drawn out, but we are expecting to receive the money ($4 million) by electronic transaction in the next day or two," he said.
"The Warehouse is keen to start work as soon as possible, because it was unable to commence construction until the sale was completed."
Marilyn Bulloch, who led opposition to the sale of the land, was stoic about the decision.
"We are pleased that we fought the battle, but it is sad to see it go, all the same," she said.
"In a way, I blame the previous councils for not doing enough to protect the railway land.
"I guess it was a battle that we would have preferred not to have to fight. When we withdrew our appeal it meant the whole thing could go ahead once the council voted for a zoning change."
That change was voted in July and brought the $4 million sale a step closer.
The city council will be responsible for putting in 156 car parks.
- NZPA
Some good news at least.
Warehouse in QLD Australia does not know anything about competition. Super specials in their mailer are dearer than competitions normal price most of the time.
AGM later this month could be interesting
Wonder if there will be an guidance given then as to how they are really performing ... otherwise March is a long way off
Ironic really - declining losses in Aust but probably declining profits in NZ
THE KING says Dear G...... AS a off the top of the head talker and a NON shareholder of WHS you could DO with more Education untill then its a wast ot time of THE KING to explain some of you stupid Q..
Please DONT start a Verbable Return.. as there will be NO REPLY..
THANKS.. [^][^][^]